Embrace succession management to ride out downturn: HR experts

13 March 2009 8:59am

Employers that stop investing in succession planning and management risk losing the benefit of their efforts over the next five - critical - years, according to a white paper by PageUp People.

Now is not the time to abandon succession planning and management (SPM), even if employees are being laid off, the paper says. Rather, "[it is] a time to embrace it".

Succession Planning & Management in Tough Economic Times, which draws together research on best-practice SPM, says that letting employees go without recognising the value they could bring to the organisation with further skills training is poor business practice. "Corporate knowledge is lost."

The need for good SPM will grow in the immediate future as many employers see significant numbers of their workforce retiring - particularly from critical leadership roles.

The paper cites research that has found some 58 per cent of organisations in the Asia-Pacific have increased investment in talent development over the past five years, and it would be inefficient, PageUp says, "to scale back these investments that would be coming to fruition over the next five years".

"As organisations need to do more with less as a result of ... demographic and social trends, those individuals who remain on are taking more responsibility as their roles expand. Retention of these key employees is critical and the importance of sufficient development and support is fundamental to this," it says.

Longer-term view needed

Up to now, the paper says, organisations have focused too much on succession 'events' (replacing key individuals) instead of considering the process by which employees are developed during their careers in preparation for their next challenge.

As the current economic uncertainty makes it harder to sustain all employees in their current positions, succession planning should be used to identify possible lateral movements as well (to different functions, project teams or geographic locations), it says.

"Businesses are operating in a different financial landscape than they were 12 months ago. Surviving and prospering in the current economic environment requires leaders to review their talent management approach carefully before reactively shedding staff.

"Those that already have a SPM program in place should focus on overcoming their unique obstacles to a best practice system; those who do not currently invest in SPM should perhaps consider the value it could add over the medium to long term."

Measure SPM success

The paper suggests a number of metrics that HR professionals can utilise to validate their SPM programs and justify the costs involved to senior management.

Areas HR can measure include the:

number of job-ready people to fill senior roles when they become vacant;

percentage of jobs filled by internal candidates;

cost of acceleration pools against the cost of finding outside hires;

cost of turnover and demotivation inside the organisation when an external hire is made;

time it takes for an outside hire to get up to speed;

turnover of external hires;

turnover of identified pool members/high potentials; and

frequency of external CEO searches.

Planning must include development

There is still substantial debate around whether replacements should come from inside or outside an organisation, the paper notes, but research suggests that insiders tend to deliver better results.

"This is only the case however if insiders have been groomed for the role. The negative impact on the organisation of a poor hire (or an unprepared internal successor) increases with the seniority of the role being filled.

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